Jim Cramer, the host of Mad Money, took to the airwaves last Friday to discuss the recent stir caused by DeepSeek in the tech world. Cramer highlighted that we’re in the midst of what he described as the most chaotic two weeks of earnings season.

He noted that last week alone, nearly 20% of S&P 500 companies reported their results, with another quarter of the index set to follow this week. On top of that, Cramer pointed to the selloff in AI stocks sparked by DeepSeek’s revelations, ongoing political turmoil in Washington, and a number of high-profile earnings reports, all of which have made it nearly impossible to keep track of everything happening at once.

READ ALSO Jim Cramer Looked Closely At These 10 Stocks and Jim Cramer’s Thoughts on These 7 Stocks

“We learned that maybe just maybe we don’t need to buy as many of those chips as we thought a Chinese outfit called DeepSeek has purportedly figured out a way to get much more out of NVIDIA’s cheaper, lower-end chips, which makes you wonder why should anybody buy the most expensive ones?”

Cramer noted that, according to DeepSeek, it managed to train an AI model for a mere $6 million, a fraction of the hundreds of millions typically required for such endeavors. DeepSeek’s claim was that their cheaper approach might even result in performance that’s as good, if not better, than what’s possible with the highest-end hardware available.

For Cramer, this announcement was unsettling. He reflected on how, for a brief moment, the tech world accepted DeepSeek’s bold claim as fact. The consensus seemed to be that DeepSeek, a company backed by a Chinese hedge fund, had effectively disrupted the semiconductor giant’s ability to command high prices for its products. However, Cramer began to question the full accuracy of this narrative. What if DeepSeek wasn’t being entirely transparent about the true cost of its hardware? What if the $6 million figure they reported was far lower than the actual expenses? He explained:

“And that’s what an article and a known authority called SemiAnalysis said today. This publication, which has covered DeepSeek for longer than most people knew it existed, speculates that the $6 million cost is highly misleading. They say DeepSeek’s real hardware spending, all in, could be more than $1.6 billion. Hmm, I wonder if the PRC’s subsidizing them.”

Our Methodology

For this article, we compiled a list of 8 stocks that were discussed by Jim Cramer during the episode of Mad Money aired on January 31. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Jim Cramer Recently Looked Into These 8 Stocks

8. HSBC Holdings plc (NYSE:HSBC)

Number of Hedge Fund Holders: 14

While Cramer called HSBC Holdings plc (NYSE:HSBC) “good”, he recommended Banco Santander, highlighting the company’s yield.

“Oh, it’s good company. It is at its 52-week high. If I’m gonna buy one of those, it’s a foreign bank, I’m gonna recommend Banco Santander because I think that Ana Botín is doing a great job. You get a little bit better yield.”

HSBC (NYSE:HSBC) offers a range of banking and financial services, including retail banking, wealth management, credit and lending, treasury and cash management, and international trade and advisory services. At the time of writing, HSBC has a yield of 3.81% while SAN’s yield is 4.26%.

7. Summit Therapeutics Inc. (NASDAQ:SMMT)

Number of Hedge Fund Holders: 21

Calling Summit Therapeutics Inc. (NASDAQ:SMMT) a “big spec”, Cramer said, “That company has no revenues. I don’t know and it has not made money. It’s obviously just a very big spec. I can’t, I can’t go there.”

Summit Therapeutics (NASDAQ:SMMT) is a biopharmaceutical company focused on developing therapies that are beneficial to patients, caregivers, and society, with a lead candidate, Ivonescimab, for immunotherapy, and SMT-738, a precision antibiotic for multidrug-resistant infections. While Cramer was discontent with the company, on January 8, Truist began coverage of the stock with a Buy rating and a price target of $35.

The firm highlighted Summit Therapeutics’ (NASDAQ:SMMT) focus on ivonescimab, a promising drug in a new class with the potential to surpass existing oncology treatments. Two important trials for lung cancer are currently underway, and Truist expects positive results that could lead to ivonescimab’s approval in the U.S. and Europe by 2026. While lung cancer is a significant market, Truist believes ivonescimab has broader potential and could make the company an attractive acquisition target for a larger biopharma company.

Bronte Capital stated the following regarding Summit Therapeutics Inc. (NASDAQ:SMMT) in its Q3 2024 investor letter:

“The short book hurt us in many ways. Several deeply junky stocks went up – and one – Summit Therapeutics Inc. (NASDAQ:SMMT) – in which we may have made a mistake – stood out above all. Even excluding Summit, our short book would have faced challenges in September, but this position exacerbated the difficulties.

A little background is necessary. Summit is (or was) a small drug company that we scored as having some suspect associations and hence a short candidate. Our database of bad people in financial markets is very broad. Summit was not such a stock. Our short signals were triggered light amber, not bright red. This meant the company required a bit more analysis…” (Click here to read the full text)